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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Monday, January 15, 2007

You Don't Get to Be Pharoah by Working Hard Building Pyramids

Or what the hell--let's call it Vulgar Libertarianism Watch, Part Umpteen Million

When I decided to drastically scale back my posting and concentrate mainly on organizational behavior stuff, I figured that meant the "Vulgar Libertarianism Watch" thing had probably run its course. But when a target this easy comes along, I just can't pass it up. Via Julian Sanchez. Jagdish Bhagwati argues in the Financial Times (where else?) that "technology, not globalisation, drives wages down":

The culprit is not globalisation but labour-saving technical change that puts pressure on the wages of the unskilled. Technical change prompts continual economies in the use of unskilled labour. Much empirical argumentation and evidence exists on this. But a telling example comes from Charlie Chaplin’s film, Modern Times. Recall how he goes berserk on the assembly line, the mechanical motion of turning the spanner finally getting to him. There are assembly lines today, but they are without workers; they are managed by computers in a glass cage above, with highly skilled engineers in charge.

This is the kind of by-the-numbers puff piece I'd expect from the Adam Smith Institute. Shifting the blame from "globalization" to "technological progress" doesn't do much good. The neoliberal argument that "technological progress" is some anonymous force of nature holds no more water than the similar neoliberal defense of "globalization" as something that "just growed."

The state's R&D subsidies, its subsidies for substituting capital for labor, its subsidies to technical education, its patent system--all of them have had a massive distorting effect in promoting skill- and capital-intensive forms of production. And in the process, they have promoted the deskilling of blue collar labor, the shifting of control over production work from the shop floor to white collar hierarchies, technological unemployment, and a two-tier job market.

This sort of thing is by no means a monopoly of the "free market" right, by the way. It's also quite popular among technocratic liberals, who likewise see such technological trends as a force of nature, and see universal higher ed and "job retraining" as the answer to everything. See, if everybody has a master's degree, then everybody will be a manager or engineer--just like that!

Joe Bageant, who apparently inherited the mantle of Christopher Lasch, made quick work of such meritocratic bullshit after getting a pile of it in a reader email. The reader signed his (her?) name "Kelly," but I wonder if he wasn't deliberately adopting the pose of an over-the-top, type-A personality as some sort of satiric commentary on that social type (like "Frank Grimes" on The Simpsons, or "Norman Greene" in The House Next Door):

I starved my way through college and am now making $75,000 a year -- and I'm only 27. I made it through by the skin of my teeth, fearing every moment that I wouldn't make tuition, that I'd be kicked out of the dorms and have nowhere to live. When they gave me my diploma, I was crying so hard I couldn't see. I forgot to shake the dean's hand. It wasn't easy, but with a little sacrifice it was possible. Upward mobility in the U.S. is neither a myth nor a pipe dream.

The reason these people you talk about can't move up in life is nobody's fault but their own. They are the reason I despair for this country. We have become lazy, fat and stupid. I appreciate your attempts to exonerate the masses, but unfortunately, even without "The man keeping them down" most of these people would be still doomed to failure. There's no reason they can't go to college. They just don't want to.

Bageant replied:

Look at it this way: The empire needs only about 20-25% of its population at the very most to administrate and perpetuate itself -- through lawyers, insurance managers, financial managers, college teachers, media managers, scientists, bureaucrats, managers of all types and many other professions and semi-professions.

What happens to the rest? They are the production machinery of the empire and they are the consumers upon [whom] the empire depends to turn profits. If every one of them earned a college degree it would not change their status, but only drive down wages of the management class, who are essentially caterers to the corporate financial elites who govern most things simply by controlling the availability of money at all levels, top to bottom, hence your hard struggle to pay for college in an entirely capitalist profit driven economy....

Clawing down basic things like an education in such a competitive, reptilian environment makes people hard. And that's what the empire wants, hardassed people in the degreed classes managing the dumbed down, over-fed proles whose mental activity consists of plugging their brains into their television sets so they can absorb the message to buy more, and absorb themselves in the bread and circus spectacles provided them through profitable media corporations operating mainly as extensions of the capitalist state's propaganda system, such as "buy this," or "you have it better than anyone in the world," (not at all true). The more generations subjected to this, the more entrenched ignorance, materialism and lack of intellectual drive becomes. So you are right to the degree that we live in a degraded society. But the dumb mooks down on the corner did not do the degrading. They never had that much power.

There are only so many vacancies at the top of the pyramid. If you don't change the shape of the pyramid itself to make it less hierarchical, the only thing you'll accomplish by giving everybody a master's degree will be to increase the educational requirements for dragging around a giant block of granite.


Anonymous P.M.Lawrence said...

I just posted about this at Julian Sanchez's site. Once it appears, it will tell people something about how time scale issues affect interactions between rapid change and a - so to speak - "relatively fixed" lump of labour.

Another issue that you and Joe Bageant are getting at without spelling out is the Fallacy of Composition. Wikipedia doesn't give any vivid ordinary experience illustrations, though. It's what's wrong with the Homer Simpson scheme to make all cars easy to find by putting markers on all of them. If everybody stands up at a contest to see better, what happens?

This also ties in with Tragedy of the Commons/Prisoners' Dilemma issues. I analyse a lot of these issues at my publications page, though I don't spell out all the mathematics (lucky you!).

Anyway, we can see either globalisation or technological improvement as being involved - or both, since there is nothing mutually exclusive there - with a deeper cause driving them, i.e. the external costs that favour downsizing/not hiring in the first place. I've suggested a first step involving the Professor Kim Swales approach of an employer tax cut to offset the pressures the other way - "Pigovian", in the jargon.

I came up with that independently, but Swales's existence proves I am not ipso facto an isolated crank. But I see a longer term progression involving a modern analogue of Chesterton/Belloc's Distributism, with people owning their own resource bases.

It's important here to use technical terms precisely. Technically, we aren't talking about government subsidies for business capital, at least in most cases. Tax breaks work like subsidies in terms of the magnitude and direction of the incentives they produce, but - and this is important to the Swales plan - they don't involve funds flows let alone cash flow from the government.

They do not require funding, just resourcing in an opportunity cost way. With the Swales plan, everything is tightly enough integrated, and the gains to teh economy are such, that if you start with the right sort of tax base already in place the way Australia has then you get immediate valuable results. These show up either as employment, or in being able to slacken off artificial employment stimulation.

What I don't think I spell out anywhere is the interaction with other economies. Essentially, there is no additional cost to the Swales plan, but it might make it more explicit what is already happening: industry migrating verseas. Now, it is doing it to get lower tax rates, but with the tax cuts driving employment it would appear to be the fault of no longer allowing downsizing to help the bottom lines of firms.

The actual way round it - ideally - is to have sufficiently small government, and sufficiently few corporations, that there is no material tax benefit from the few emigrating, and little cost if they do. Failing that, the best short term measure is to commute their corporation tax obligations for a proportion of shares. Then if the firms emigrate, the revenue keeps coming back.

But we are getting into a whole other area here, with sinking fund type problems, an area that is like a viable Social Credit scheme. So I'll stop before I bore too many people.

Mirabile dictu, I seem to have sufficient energy to contribute, these last few days!

January 16, 2007 3:30 AM  
Blogger Jeremy said...

I really appreciate this idea you're pursuing lately where tech progress is arbitrarily pursued along centralized, rather than decentralized, lines. Also, thanks for highlighting Baegant's great blog - I always love finding out about new, like minded bloggers.

January 16, 2007 8:36 AM  
Blogger Dr. Lenny said...

it seems that the sacred geometry that governs the pyramids is making a comeback in many observational forms. The ideas of the hard-assed management class taking on the elite's gruntwork in exchange for better peonship is right on. But there is no way that things can come to a crashing halt unless we stop doing the work, or alter the benefits of the work to serve other masters. We ought to be our own masters, but what does that mean as far as responsibility distribution and the capability to get things done?

Being an ardent reader of Rand, one has to feel that we can do better. However, the student of chaos theory knows that the order that comes from true chaos is a more natural order. If the remnants of the prior structure are used to brace the descent, then we only get a morph, not the true cycle that we need. In other words - greater anarchy breeds 'higher order' by forcing mutualism - as part of survival of the fittest, so to speak.

Using nature to model function may be more optimistic than using economics, but the math behind both concepts is the same math. It leads me to believe that there are other disciplines that also use the same mathematical concepts that are only a rotation away, to use a symmetry term. Group theory is a very powerful tool for prediction, but the inputs into the system must be technically correct. I fear that we should introvert our work in order to not allow the system to chew it up and spit it back at us denuded. That seems to be the realm of thought we have to deal with. Down the road when we pick up the pieces, we will find pockets of independent thought that can collaborate in novel ways. The same old, same old is getting too old.

January 16, 2007 1:50 PM  
Anonymous Anonymous said...

zfppfjeHalf the people in this country have IQs of less than 100. They're not going to go to college, or be managers, or engineers, or doctors. They're going to be blue-collar.

At one time in the past they were highly-paid. Not any more, though. The ways things are going they're all going to be on welfare.

January 17, 2007 4:36 AM  
Blogger Nick Manley said...


Would one of the forces at work be the laws of supply and demand? More supply of techinal labor but not necessarily more demand thus leading to a decrease in wages.

January 19, 2007 11:56 AM  
Blogger shrimplate said...

What will happen to all this when the cheap fuel runs low, as it surely will and perhaps in just a few decades?

Will need for labor-intensive skills then become resurgent? Will we have value for farmers, carpenters, animal husbandrists, and the like, instead of engineers whose claim to value rests solely on managing complex machinery driven by abundant inexpensive fossil fuels?

Technology is not energy.

January 20, 2007 9:19 AM  

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